Wounded ex-Service personnel should be given special protections from the changes being drawn up by Iain Duncan Smith, the RBL has told ministers.

Failing to protect the wounded from the impact of the cuts would be a failure under the Military Covenant, the legion warned.

In an interview with The Telegraph, Mr Duncan Smith, the Work and Pensions Secretary, said this week that reforms to Disability Living Allowance will mean that people who lose limbs will not be automatically entitled to payments.

Officials estimate that a total of 500,000 people will lose disability benefits under Mr Duncan Smith’s plan for a “more focussed” allowance called the Personal Independence Payment available only to those in “genuine need” of support.

In a formal submission to the Department of Work and Pensions’ consultation on the reforms, the RBL has warned that the criteria that could be applied to the new benefit could hit limbless ex-Servicemen especially hard.

The RBL told ministers it is “concerned” about proposed rules to link payment to an applicant’s ability to move with the use of aids such as prosthetic limbs.

The chances will mean that “many veterans with mobility problems, particularly amputees, no longer qualify” for payments to help with mobility.

That would result in “a loss of support for many disabled veterans”, the RBL said. In particular, they could be denied “vital access” to the Motability scheme, which provides subsidised cars for the disabled.

Chris Simpkins, director general of the RBL, said that the DWP was failing to take account of the suffering experienced by men who have lost limbs on operations.

“Having your leg blown off and having to wear an artificial limb can never be preferable to having a normal, healthy limb. Focusing on functionality fails to take into account the long-term trauma suffered and the sacrifice made, not to mention the lifelong fluctuations in pain and mobility that accompany limb loss,” he said.

The way ex Servicemen are treated in the reforms “goes to the heart of the Armed Forces Covenant and how we, as a nation, recognise the unique sacrifices our injured Service personnel have made for us.”

The DWP promised to consider the RBL’s submission carefully.

A spokesman said: "We owe the men and women who have served their country a huge debt of gratitude and will do everything we can to help them to find work and get the benefits they are entitled to if they are injured.

"The new assessment is not yet finalised and we continue to work with disability organisations and others on the development. We are considering their views carefully as we decide what further improvements are needed."